GTT Seeks Loan to Steady Finances Until Data Center and Fiber Sale

Katherine Doherty and Allison McNeely (Bloomberg) -- GTT Communications Inc. is soliciting a short-term loan from existing creditors to keep it operating until the telecommunications company completes the sale of its infrastructure unit next year, according to people with knowledge of the plans.

First-lien lenders and bondholders are being asked to decide by the end of this month if they want to provide a new super-senior loan of $200 million to $300 million, the people said, asking not to be identified discussing a private matter. The financing would support operations through the second half of 2021 when the sale is expected to close, the people said.

Representatives for GTT, which is based in McLean, Virginia, didn’t immediately respond to a request for comment. The company’s unsecured bonds dropped to a new low.

GTT agreed last month to sell its fiber and data center infrastructure division to I Squared Capital for $2.15 billion. Digital infrastructure assets like optical fiber have been the focus of a flurry of deals. Investors favor their reliable, long-term returns, and the Covid-19 pandemic has fueled demand as more people work, shop and socialize online.

Long Process

The company has been searching for ways to build cash to support its operations and $3.4 billion debt load. The sale of the infrastructure unit has a long timeline because it has to pass antitrust, cross-border and other regulatory approvals, the people said.

Related:GTT Sells Fiber and Data Center Unit to I Squared for $2.15 Billion

GTT provides web connectivity and cloud network services to companies and governments around the world. The company has been operating under forbearance from its creditors since the end of October after missing a deadline to file its earnings report, and has said it doesn’t expect to meet a Nov. 30 deadline to release second- and third-quarter results.

Debt holders are in private talks with the company and have until the end of this month when the forbearance expires to decide whether to participate in the new financing, the people said. Discussions between the company and creditors remain fluid and are expected to continue through the remainder November, and an extension is possible, they said.

GTT’s financial bind stems in part from high-cost acquisitions that didn’t increase earnings. It reported $106 million in cash for the first quarter, the last time it released financial results. The company’s debt trades at deep discounts, with its first-lien term loan B quoted around 78 cents on the dollar. Its unsecured 2024 notes fell 5.25 cents on the dollar to 32.75 cents on Wednesday, a new record low.

Related:Investment Bankers Expect the Pandemic to Fuel a Long-Term Data Center Boom